Simon Read: Facebook and PayPal may be about to cash in as people get more fed up with high-street banks
Which? says the unfair current account market is long overdue for a shake-up. It called this week for the Competition and Markets Authority to refer current accounts to a full competition inquiry.
Explaining why, the Which? executive director, Richard Lloyd, said: "Low switching levels and a high level of complaints show the unhealthy dominance of the biggest banks is set to continue and this market is not working in the best interests of consumers.
"We estimate only 4.2 per cent of people will switch accounts this year. Unless we see an injection of much-needed competition into the market, the major high-street banks will continue to have a stranglehold."
That needs to change. But there are more positive indications that financial services will sooner or later be snatched away from the high-street banks' stranglehold.
The biggest news this week was the reports that Facebook has plans to enter the arena. The social network isn't apparently intending to take on the banks directly, but instead will provide remittances and electronic money. To put it simply, the internet giant will give its users the power to transfer cash between each other.
That sounds like quite an attractive prospect to me. The chance to click on a mate or family member on Facebook and transfer cash to them, either as a gift or because you owe it to them, could be hugely convenient.
Paypal is already a giant of payments in the internet world and appears to have partial aspirations to take on the banks. In fact it is already vested as a bank in Europe, in the tax-effective country of Luxembourg.
It's also moving fast into the world of payments on the high street, with Paypal already having signed up more than 2,000 UK shops and restaurants to accept its smartphone app as a payment method.
Moving money around is the main reason why most of us use banks in the first place, so switching loyalty to internet firms may not be too far away. That's especially likely given the continuing low levels of trust that the big banks have among consumers. Are the internet firms more likely to be trusted? Despite Facebook's many mis-steps, such as concerns about personal data mining, it is still seen as a relatively trusted company.
Paypal, too, has had criticisms, not least for its actions in locking up people's cash for months on the slightest suspicion of fraud. But it has worked to improve its terms and conditions and many millions use it every day with no complaints.
So both are likely to be well placed to seem attractive to people fed up with rip-off charges and poor service from their bank.
However, privacy issues will remain important. If Facebook is seem to be further abusing its position as the holder of billions of pieces of personal information, then it will kill its chances of becoming a trusted provider of financial services, even if it just turns out to be money transmission. For instance, recent research showed that prospective borrowers were disgusted at the news that lenders, such as Wonga, use social media as a means to make a decision on whether to lend to them.
The research for Amigo Loans showed that seven out of 10 borrowers are unhappy about the practice. More than a third said it made them angry, labelling it untrustworthy and an invasion of privacy. And in a clear warning to Facebook, almost half said they would consider deactivating their social media profiles if they discovered such a breach of privacy.That's something the big data firms and social networks must consider before driving away their users by exploiting them too much.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 Fifty Shades of Grey trailer provokes moral outrage from US parenting groups
- 4 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 5 Students offered grants if they tweet pro-Israeli propaganda
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar